Daniel Ek, Spotify founder and chief executive, said, “Spotify and Tencent Music Entertainment see significant opportunities in the global music streaming market for all our users, artists, music and business partners. This transaction will allow both companies to benefit from the global growth of music streaming.”
With clear plans to foster some kind of collaboration between the two firms, the move will see Tencent’s subsidiary Tencent Music Entertainment Group (TME) and Spotify take minority stakes respectively by acquiring new shares for cash.
Tencent will also invest in Spotify through secondary purchases and also gain a minority stake in the business.
The size of the stakes have not been disclosed, however, a report in The Wall Street Journal published last week stated the two companies would swap stakes of less than 10%.
The news came as the music streaming market heats up with recent reports suggesting YouTube plans to launch a paid music service next year, while Apple allegedly wants to beef up its own music offering by purchasing Shazam.
Cussion Pang, chief executive of TME, noted: “ TME and Spotify will work together to explore collaboration opportunities, with a common objective to foster a vibrant music ecosystem that benefits users, artists and content owners.”
Tencent president Martin Lau said the two companies had shared objectives to expand "the global digital music market for artists and content partners”.
Spotify, which has 140 million users worldwide, is the latest in a string of companies to receive investment from Tencent.
The Chinese internet giant, which was recently valued at $500bn alongside the likes of Apple, Microsoft and Facebook, has also taken stakes in Tesla,Snap,Flipkart and Hike, among a host of other companies.